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Stock Investing > The Peridot Capitalist
Why The Fed Should, And Probably Will, Give Aig A Loan To Help Fight Off Bankruptcy
Chad Brand | Tue, 09/16/2008 - 11:39am |
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Keep in mind that this is not a bailout. A bailout is a hand out. A loan is money that needs to be paid back, and in AIG's case, probably within a relatively short amount of time. The Fed should even be able to charge interest on such a loan to make some profit for the taxpayers.
Reasonable minds can argue whether Bear Stearns and Lehman Brothers should have been treated equally or not, but given that AIG is solvent and simply needs a short term loan to sell some of its assets to eager buyers, the Fed should step up and play its role of lender of last resort. With the Dow up now, after being down 175 this morning, it appears Wall Street is pricing in some kind of resolution sooner rather than later. Let's hope so...
Full Disclosure: No position in AIG at the time of writing

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